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a. The current multifactor productivity for 640 work hours per month is 0.2568 loaves/dollar. b. The current multifactor productivity for 800 work hours per month is 0.2130 loaves/dollar. c. The percentage increase in productivity from implementing a new loading technique is 1.305%

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Yusuf Ansari
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52 views4 pages

Summary

a. The current multifactor productivity for 640 work hours per month is 0.2568 loaves/dollar. b. The current multifactor productivity for 800 work hours per month is 0.2130 loaves/dollar. c. The percentage increase in productivity from implementing a new loading technique is 1.305%

Uploaded by

Yusuf Ansari
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Summary:
a. The current multifactor productivity for 640 work hours per month is 0.2568 loaves/dollar.
b. The current multifactor productivity for 800 work hours per month is 0.2130 loaves/dollar.
c. The percentage increase in productivity is 1.305%
The explanation of my answer is given below.
Explanation:
a.
Output = 1600 
Wages  = 640 × 8 
= 5120

Utility cost = $550 


Ingredient = 0.35 × 1600
      = $560

 Total cost =5120 + 550 + 560


     =6230
Multifactor productivity = Output/ Input (cost) 
     = 1600 / 6230
     = 0.2568 loaves per dollar
b.
Output = 1600 
Wages = 800 × 8 
= 6400 
Utility cost = $550 
Ingredient = 0.35 × 1600
      = $560
Total cost = 6400 + 550 + 560
      = 7510
Multifactor productivity = Output/ Input (cost) 
    = 1600 / 7510
   = 0.2130 loaves per dollar
c. 
Productivity is given as:
P = Output/Input
Current Situation:
Each employee work for 160 hours per month
Labor productivity = 2.5 loaves per hour
Each worker works 160 hours per month
Labor hours required to produce 1600 loaves per month = Number of workers x 160 hours
per month
Let, N = number of workers required
Labor hours required = (N x 160) hours/month
Productivity = Output/Input
Output = 1600 loaves per month
Input = 160N labor hours per month
Productivity = 2.5
N =4
2.5 = 1600 / 160N
       = 1600 / 160(4)
      = 1600 / 640
To satisfy current demand bakery requires 4 workers
Demand Increased situation:
The demand increases by 25%,
New demand = 1.25 x 1600 
  = 2000 loaves per month
Productivity = Output / Input
Output = 2000 loaves per month
Input = 160N labor hours per month
Productivity = 2.5
N = 5 workers
2.5 = 2000 / 160N
       = 2000 / 160(5)
       = 2000 / 800

Number of workers required to match the required demand = 5

Additional workers required for manual loading = 5 – 4 


             = 1 worker
Current Situation:
Productivity with the demand of 1600 loaves/month
Labor cost = 4 labors x $8/hour x 160 hours/month 
                  = $5120
Raw materials cost = $0.35/loaf x demand
              = $0.35 x 1600 
              = $560 per month
Utility cost = $550 per month
Total input cost = labor cost + raw materials cost + utility cost
Total input cost ($) = $5120 + $520 + $560
              = $6200
P1 = Productivity (loaves per dollar) = 1600/$6200 x 100 
           = 25.806 loaves/dollar
New loading technique:
Productivity with the demand of 2000 loaves/month (requires 5 workers for loading
technique)
Labor cost = 5 labors x $8/hour x 160 hours/month
        = $6400
Raw materials cost = $0.35/loaf x demand 
             = $0.35 x 2000 
             = $700 per month
Utility cost     = $550 per month
Total input cost = labor cost + raw materials cost + utility cost
Total input cost ($) = $6400 + $700 + $550
             = $7650
P2 = Productivity (loaves per dollar) = 2000/$7650 x 100
           = 26.143 loaves/dollar
Productivity change = (P2 – P1)/P1 x 100 
         = (26.143 – 25.806)/25.806 x 100 
                                  =(0.337/25.806) (100)
                                  = 1.305%
Productivity is increased by 1.305%

Reference:
https://www.chegg.com/homework-help/questions-and-answers/113-charles-lackey-operates-
bakery-idaho-falls-idaho-excellent-product-excellent-location--q4367880
https://www.chegg.com/homework-help/questions-and-answers/charles-lackey-operates-
bakery-idaho-falls-excellent-product-location-demand-increased-35--q7810193
https://www.coursehero.com/file/p66mrcgp/Because-of-its-excellent-product-and-excellent-
location-demand-has-increased-by/

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